In What Way Does Long-Run Equilibrium Under Monopolistic Competition Differ

question 60

Multiple Choice

In what way does long-run equilibrium under monopolistic competition differ from long-run equilibrium under perfect competition?

• A)Firms in perfect competition achieve productive and allocative efficiency while firms in monopolistic competition achieve neither allocative nor productive efficiency.
• B)The only difference is that in a monopolistically competitive market there are many brands to choose from while in a perfectly competitive market there is one standard product.
• C)Firms in perfect competition achieve productive efficiency while firms in monopolistic competition achieve allocative efficiency.
• D)Firms in perfect competition achieve allocative efficiency while firms in monopolistic competition achieve brand efficiency.

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Definitions:

FIFO Method

An inventory valuation method that assumes the first items placed into inventory are the first sold, standing for "First In, First Out."

Periodic System

An accounting method where inventory updates are made on a periodic basis, usually at the end of a reporting period, rather than after each transaction.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases less cost of goods sold.

Overstated Inventory

A situation where the recorded amount of inventory is higher than the actual inventory available, often due to error or mismanagement.